PATH CLEARED FOR BHP’S DEPARTURE FROM OK TEDI

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PORT MORESBY, Papua New Guinea (February 22, 2001 – (Post-Courier/PINA Nius Online)--- Rothschilds merchant bank had prepared a "preferred withdrawal option" for BHP’s departure from its environmentally-troubled Ok Tedi copper mine in far western Papua New Guinea, it was announced.

In announcing the move, Papua New Guinea Prime Minister Sir Mekere Morauta said Rothschilds was the independent mediator agreed to by BHP and the PNG government for BHP’s exit from the 20-year-old mine.

Ok Tedi is at Tabubil, Western Province, near the West Papua border.

When Ok Tedi was opened in 1981, it was hailed as one of the world’s most environmentally sound projects.

That boast about the then AUS$ 1 billion (US$ 524,509,000) project soon soured, with the Fly River – PNG’s biggest -- polluted by escaped tailings and chemicals, subsistence farmland poisoned and -- late last year -- a multi-million-dollar action for damages from local landowners in the Supreme Court of Victoria.

In July last year, BHP chief executive Paul Anderson visited Port Moresby to tell the PNG government BHP wanted out of Ok Tedi this year -- 10 years before its projected mine life of 30 years.

It is understood BHP’s exit plans include on-going provision for an environmental cleanup and infrastructure safeguards into the future for the viability of the "boom" town of Tabubil -- a mountainside jungle clearing in 1981, and now a thriving town of 12,000 people almost totally dependent on the mine.

Sir Mekere said the National Executive Council (cabinet) had endorsed further negotiations on BHP’s withdrawal from Ok Tedi.

"The first step will be to seek independent legal and technical advice in order to assess the economics of the project," he said.

"It is important that the state carries out an independent study to assess the environmental, economic, social and legal aspects of Ok Tedi to enable us to negotiate an acceptable outcome."

The study will also cover proposals from Rothschilds, which has developed "a preferred withdrawal option, which requires further negotiation," he said.

"Any withdrawal must be acceptable to all parties: the state, the companies and the people of Papua New Guinea, the Western Province and the Fly River and mine areas.

"The social, environmental and financial impacts of the mine, and BHP’s withdrawal on the nation and Western Province must be very carefully assessed and balanced."

Cabinet also directed the state negotiating team to negotiate an agreement between the state, BHP and Inmet of Canada (it owns 18 percent of Ok Tedi mine) on BHP’s withdrawal and to evaluate the details of the financial and structural arrangements.

U.S. conglomerate Atlas Mining Corporation is understood to be among a number of multinational companies interested in buying out BHP’s share in the copper mine.

A BHP spokesman told AAP from Melbourne on February 12 that the "Big Australian" had been approached by "a number" of companies about buying out BHP’s 52 per cent share in Ok Tedi Mining Limited (OTML), operators of the mine in the Star Mountains.

The PNG Government wants Ok Tedi -- which provides 10 percent of PNG’s GDP -- to remain open for its projected final 10 years.

The PNG government owns 30 percent of OTML.

The government announced last year that a team would be set up to draw up the terms of reference for the review of the Ok Tedi mine.

However, the terms of reference have yet to be made public. There have been conflicting reports over the status of the recommendations, put together by a team comprised of representatives from line departments.

For additional reports from The Post-Courier, go to PACIFIC ISLANDS REPORT News/Information Links: Newspapers/The Post-Courier (Papua New Guinea).

Pacific Islands News Association (PINA) Website: http://www.pinanius.org 

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